8 Trends Boosting Supply Chain Efficiency

Logistics is a key area of focus for companies hoping to improve their supply chains, experts say.

As the supply chain becomes more complex with suppliers, their customers and consumers interacting with each other across the globe and across different channels, it’s more important than ever for companies to get and maintain good control of their logistics.

How can they do that? They can start by paying attention to what experts say are eight of the top trends impacting logistics and supply chains:

More Intelligent Order Management Systems

Retail companies want to embrace omni-channel environments that leverage inventories in stores as well as in traditional warehouses/distribution centers. "Retailers are trying to better leverage their inventory across the whole network," said Pete Wharton, product marketing leader for IBM Commerce. "They are changing how they allocate inventory."

Companies can offer a number of different products via a variety of channels, "but if you don’t handle the fulfillment piece correctly, it’s not going to happen," said Derek Gittoes, vice president of value chain execution product strategy at Oracle.

So companies are using next-generation order management systems that can ship a product out of a nearby store’s inventory rather than from the inventory of a more distant distribution center. These order management systems also include metrics about store traffic and demand, so the system doesn’t drain local inventory to the point that in-person customers can’t find the product.

Similarly, these order management systems help with ship-to-store orders, a popular choice among online shoppers.

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In some instances, retailers and manufacturers will choose not to inventory the items themselves in warehouses or in stores, but instead leave the inventory with suppliers and enable customers to order directly from these third parties. The next-generation order management systems are designed to enable companies to fulfill orders from the least expensive source, while still meeting customer expectation for delivery time.

Global Supply Chain Compliance

Supply chains increasingly extend across continents and across the world. To manage this added complexity, Gittoes said companies use the newest global trade management systems that include not only typical logistics information such as locations of products, shipments and expected delivery times, but also regulations of different countries and the nuances of different trade agreements.

While the agreements themselves are somewhat stagnant, some of the tenets of those agreements are dynamic, particularly as new products and new suppliers enter the market. The products and suppliers must comply with rules in the trade agreements, as well as commerce rules of different countries. Global trade management suppliers offer applications designed to track these nuances in real time.

Mobile Apps in the Warehouse

Companies are deploying iPhones and related apps in the warehouse for cycle counting, shipping, receiving and other logistics tasks, said John Sprunger, senior manager of the workforce optimization practice of West Monroe Partners, a Chicago-based analyst firm. The phones, typically iPhone 4s, include barcode reader attachments and are available for about $100 apiece. They supplant much larger, more expensive and less mobile traditional warehouse barcode readers and printers, Sprunger said.

These systems also make it easier to rationalize the company’s SKUs, said Jeremy Tancredi, West Monroe Partners senior architect. Companies use warehouse-gathered information to adjust where some SKUs are stored and to determine which ones to drop entirely.

In-warehouse tracking of employees has also become more sophisticated, so companies can determine not only when employees arrive and leave but also track if they are performing the right tasks at the right times, Tancredi said.

iBeacons in the Warehouse

While the iPhone barcode scanners and related applications help track products entering and leaving the warehouse, companies are starting to rely on iBeacons to track materials, particularly high-value materials, when moved from place to place within the warehouse, Sprunger said. "iBeacons can track something down to a five- to 10-foot level; that’s something GPS can’t do."

The iBeacons facilitate quick identification of location and improved inventory management, he said.

Big Data Beginning to Pay off

"Enterprises have been collecting a lot of data for a lot of years, but they’re just now learning to how to best use all of that data," said Jim Haughwout, chief architect of Savi Technology.

Firms use applications that track not only when products and trucks leave and arrive at different locations, but also goods and vehicles in motion, road construction delays, weather and anything else that might delay shipments. This detailed data enables companies to select different shipping routes, alternate carriers and make other tweaks in order to maximize logistic efficiencies.

Beyond the in-depth logistics details, the top logistics systems can track items such as theft at different ports to help companies decide which shipping routes best meet their needs for each order, Haughwout added.

Automated Data Exchange

"One of the things that we are seeing is a lot of data being passed between portals and transportation systems," said Bill Galusha, senior product marketing manager for Kapow Software, a Kofax company. "Traditionally, they have used EDI, but that doesn’t lend itself to the flexibility that nimble businesses need today. So companies are using a non-coding approach as they look for alternatives to manual processes."

Rather than re-entering information from shipments along different parts of the supply chain, companies are employing systems that automatically update status, inventories, shipments in transit, receivables, payments, payables and other data critical to a company’s bottom line, he noted.

IoT Information

Closely tied to the increasing use of Big Data is more use of applications that leverage the data offered by the Internet of Things (IoT), including data from sensors, said Benjamin Chodroff, CTO of CloudOne.

For example, sensors on trucks feed information about status of components to trucking company service shops so that they can perform preventative maintenance rather than allowing a vehicle to break down on the road. The sensors provide real-time details on component performance, age and other factors. On-board sensors also provide real-time information on routine services such as oil changes and miles on tires. This enables the company to perform needed maintenance when the vehicle is near a repair facility rather than when it is in the middle of a delivery.